Left out

James Wolfen­sohn the (Aus­tralian) head of the World Bank says bq. he would “have to think very care­ful­ly” whether [the pro­posed US-Aus­tralia Free Trade Agree­ment] was worth­while if it came at the expense of the mul­ti­lat­er­al trad­ing sys­tem, strug­gling after the col­lapse last year of talks aimed at low­er­ing inter­na­tion­al bar­ri­ers to free trade. bq. “It would be a tragedy, I think, if the world frag­ment­ed into region­al trade arrange­ments — it leaves peo­ple out and we can’t leave peo­ple out.” (“The Aus­tralian newspaper”:http://www.theaustralian.news.com.au/common/story_page/0,5744,8578853%255E2702,00.html) The WTO is already limp­ing along. The explo­sion in the num­ber of region­al trade agree­ments is not, how­ev­er, the cause. The WTO’s own assess­ments in its 2003 annu­al report points to the rapid growth in poten­tial­ly dis­crim­i­na­to­ry trade deals but detects no evi­dence that they have slowed net trade growth or sign­f­i­cant­ly ‘divert­ed’ trade from its expect­ed pat­tern under non-dis­crim­i­na­to­ry rules. A big­ger chal­lenge that the WTO faces is to over­come the prob­lem so evi­dent at the Can­cún min­is­te­r­i­al meet­ing last Sep­tem­ber. Some countries—including the world’s poorest—are leav­ing them­selves out of the growth of world trade by shy­ing away from agree­ments to reduce trade pro­tec­tion and bar­ri­ers to invest­ment.

Peter Gallagher

Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.

He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher